UK Accounting Glossary
Digital money is money transmitted in electronic form to pay for good and services, typically over the Internet or through other electronic media. A vendor accepting digital money contacts the issuing bank upon receipt of a buyer’s payment authorization. The vendor then receives the funds’ transfer and fulfils the order of goods or services. Digital money is transacted through different methods. The first method is using the traditional credit card to transmit digital money through a security protocol known as Secure Socket Layer (SSL) used by many Internet browsers. Software using SSL may securely accept credit card information used for a digital money transaction. A second method used to transmit digital money is by using digital money that is either downloaded from a participating bank to a user’s computer or put into an account set up at the bank. This digital money (if stored on the computer) or the corresponding debit transaction (if stored in a bank account) is transmitted in encrypted form to the merchant for payment. E-money is another term used to describe digital money.
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This glossary post was last updated: 9th February 2020.